January 2015 Newsletters

Compliance Checkup

Do not forget to inform your management and staff about the annual adjustments for thresholds determining applicability of certain regulations as well as what the minimum capital ratios are for 2015.

We have listed those adjustments and minimums below.

CRA Thresholds for 2015 –

Banks are evaluated under different CRA examination procedures based on their asset size. Those meeting the small and intermediate small asset-size threshold are not subject to the reporting requirements applicable to large banks and savings associations.

Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million.

Because of the increase in the CPI index for the period ending in November 2014, the definitions of small and intermediate small banks for CRA examinations will change as follows:

"Small bank" or "small savings association" means an institution that, as of Dec.31 of either of the prior two calendar years, had assets of less than $1.221 billion.
"Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $305 million as of Dec. 31 of both of the prior two calendar years, and less than $1.221 billion as of Dec. 31 of either of the prior two calendar years.

HMDA Thresholds for 2015 –

Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million.

For 2014, the threshold was $43 million. During the 12-month period ending in November 2014, the average of the CPI-W increased by 1.1 percent. As a result, the exemption threshold is increased to $44 million. Thus, banks and savings associations with assets of $44 million or less as of Dec. 31, 2014, are exempt from collecting data in 2015. That being said, a bank’s exemption from collecting data in 2015 does not affect its responsibility to report data it was required to collect in 2014.

Reg Z and Reg M Thresholds for 2015 –

Dodd-Frank Act amended TILA and CLA by requiring annual adjustments to the thresholds based on the annual percentage increase in the consumer price index for urban wage earners and clerical workers. Only those transactions at or below the thresholds are subject to the protections of the regulations.

Based on the annual percentage increase, TILA and CLA will apply to consumer credit transactions and consumer leases of $54,600 or less in 2015.

Keep in mind, this particular exemption threshold is not applicable to some types of credit, as listed below:

Loans secured by any real property, or by personal property used or expected to be used as the principal dwelling of the consumer; or
Private education loans.

Private education loans and loans secured by real property (such as home mortgage loans) remain subject to TILA regardless of the amount of the loan. 

HOEPA Threshold Adjustments -

This section of the regulation contains a points and fees coverage test for use in calculating whether a transaction is a high cost mortgage. When effective, the total points and fees thresholds are as follows:

5% of the total loan amount for loans greater than or equal to $20,391

8% of the total loan amount or $1,020, whichever is less, for loans less than $20,391

Ability to Repay/Qualified Mortgages (ATR/QM): This section of the regulation contains standards for determining whether a transaction is a QM. In part, a transaction is not a QM if the transaction’s total points and fees exceed certain thresholds, based on specific loan amounts. When effective, the thresholds are as follows:

Points and fees may not exceed 3% - for a loan amount greater than or equal to $101,953

Points and fees may not exceed $3,059 - for loans greater than or equal to $61,172 but less than $101,953

Points and fees may not exceed 5% - for loans greater than or equal to $20,391 but less than $61,172

Points and fees may not exceed $1,020 for loans greater than or equal to $12,744 but less than $20,391

Points and fees may not exceed 8% - for loans less than $12,744